• Last Candlesticks pattern: Bullish engulfing
• Time of formation: 02 May 2016
• Trend bias: Up
• Last Candlesticks pattern: Hammer
• Time of formation: 19 Oct 2016
• Trend bias: Up
USD/CAD – 1.3395
The greenback found decent demand at 1.3223 early last week and has staged a strong rebound (a hammer and a long white candlestick bullish patterns were formed on the daily chart), the subsequent breach of previous resistance at 1.3456 confirms the correction from 1.3535 has ended at 1.3223, bring retest of this level later. Looking ahead, a break of the level would retain bullishness and extend early erratic upmove from 1.2461 low to 1.3599, then 1.3660-70 but still reckon upside would be limited to 1.3700 and risk from there is seen for a retreat later.
On the downside, whilst pullback to 1.3400 cannot be ruled out, reckon the Kijun-Sen (now at 1.3362) would contain weakness and bring another rise later. A daily close below the upper Kumo (now at 1.3339) would defer and prolong consolidation, risk weakness to 1.3262 support but last week’s low at 1.3223 should remain intact, bring another rebound later. In the event the pair drops below said support at 1.3223, this would shift risk back to the downside for the erratic fall from 1.3535 to bring correction of early upmove to 1.3200, then 1.3160-65 but reckon downside would be limited to 1.3100 and price should stay well above support at 1.3056, bring rebound later.
Recommendation: Buy at 1.3400 for 1.3590 with stop below 1.3300.
On the weekly chart, as the greenback has staged another strong rebound after finding good support at 1.3223 last week, suggesting the pullback from 1.3535 has ended there and consolidation with upside bias is seen for further gain towards said resistance, however, break there is needed to retain bullishness and extend the rise from 1.2969 to indicated previous resistance at 1.3599 but only a break of this resistance would signal upmove from 1.2461 (2016 low) has resumed for headway to 1.3700 and later towards 1.3835-40 (61.8% Fibonacci retracement of 1.4690-1.2461) which is likely to cap upside.
On the downside, expect pullback to be limited to 1.3400-10 and 1.3360-65 should hold, bring another rise later. Below the Kijun-Sen (now at 1.3284) would bring test of said support at 1.3223 should remain intact, bring another rebound later. A weekly close below this support would signal top has been formed at 1.3535 and test of previous resistance at 1.3210 would follow, however, break there is needed to add credence to this view, bring further fall to 1.3150-60, break there would signal the rebound from 1.2969 has ended, bring subsequent decline towards 1.3083 but indicated support at 1.3056 should hold from here, risk from there has increased for a rebound later.